This chapter studies shareholder activism through environmental, social and governance (ESG) proposals between 1996 and 2015 filed by social responsible funds (“SRI”).

Larger, more mature firms with higher institutional holdings are more easily targeted by these proposals. An equal-weighted portfolio of target firms earns a four-factor alpha of 0.22% on the date of filing.

Target firms with subsequent successful proposals earn higher buy-and-hold abnormal returns over the event period and have better long-term operating performances than firms whose proposals subsequently fail. Moreover, social performances of the target firms also improve.

These findings not only provide new evidence on the mechanism and outcome of shareholder activism on ESG issues but also highlight the role of SRI in effective shareholder activism.